Employers Call California Assembly Bill 465 a “Job Killer”

There has been a lot of news lately about Assembly Bill 465 (AB 465). While employees and labor rights organizations are heralding the new law a major improvement in the rights of employees, employers are calling it a “job killer,” according to a recent article by the National Law Review.

AB 465 makes it illegal to force employees to sign mandatory employment arbitration agreements as a condition of employment. The mandatory employment arbitration agreements are supposed to be mutually beneficial and must consider an employee’s rights to due process under the law, but in reality they rarely do.

As our Los Angeles employment attorneys have seen all too often, these mandatory employment arbitration agreements tend to heavily favor the interests of the employer at the stake of the employees. The reason they are deemed mandatory is because employees are told they need to sign one if they want to get the job.

Essentially, we are dealing with a prospective employee being forced to sign a document that requires the employee to waive his or rights under the California Labor Code. It also requires the employee to submit to binding arbitration at the cost of the employee, in many cases. Since there is no way most employees can afford to pay for an arbitrator and the binding arbitration process, the employee is essentially left without a remedy. It should be noted that while the bill has passed the State Assembly and the State Senate, Governor Brown has until the middle of October to sign the bill into law. It is for this reason both sides have not given up their competing efforts with respect to the passage of this bill.

The employers and the California Chamber of Commerce are calling this a job killer because, by allowing them to take legal action in what they are calling an “already abused legal system,” it will drive up litigation costs. If litigation costs are up, then the chamber claims this will mean these employers have less money to pay in wages and benefits, which will, in turn, mean fewer jobs for the people of California. In addition to this argument that the law will harm employment rates in California, the opponents of the new law are also arguing the federal law already in place will preempt this law and will therefore make the new law ineffective.

The concept of federal preemption comes from the Supremacy Clause of the United States Constitution. In the constitution, it says that any law written in the constitution is the supreme law of the land. In other words, if any law made by a state is conflict with the constitutional law, then the state law will take a back seat or be preempted by the national law.

However, since most federal laws come from acts of Congress, and Congress can only act if authorized by the constitution, federal laws not directly contrary to the United States Constitution are also considered the supreme law of the land and preempt any conflicting state law. Since this will happen automatically by operation of law, the fact employers are making this argument shows they might not be so convinced.

Contact the employment attorneys at Nassiri Law Group, practicing in Orange County, Riverside and Los Angeles. Call 714-937-2020.